Labor is often not taxable in the US, but it depends on the state and the trade. Most states tax goods and only the services their law lists. Texas leaves residential repair labor untaxed but taxes lawn care and house cleaning. New York taxes repair work and lawn mowing. Hawaii, New Mexico and South Dakota tax nearly every service. Materials you sell to a client are usually taxable in any state with a sales tax.
Last checked: October 2026, against the tax agency pages linked in each section. This is general information, not legal or tax advice. Rules vary by state and country, and they change, so confirm your own situation with your state's revenue department or an accountant.
Is labor taxable?
In most states, labor is taxable only when state law names that service. Each state writes its own list, so the same job can be taxed in one state and untaxed in the next.
Here is how four large states treat the trades this guide covers:
| Service | Texas | California | New York | Washington |
|---|---|---|---|---|
| Repair labor on a home | Not taxable | Itemized repair labor generally not taxable | Taxable (capital improvements are not) | Taxable |
| Repair labor on a commercial building | Taxable | Itemized repair labor generally not taxable | Taxable (capital improvements are not) | Taxable |
| Lawn care and landscaping | Taxable | Services generally not taxable | Mowing and maintenance taxable; a new lawn is a capital improvement | Taxable |
| Cleaning | Taxable, homes and businesses | Services generally not taxable | Interior cleaning taxable | Janitorial not subject to sales tax (B&O tax instead) |
| Photography | Taxable | Taxable with prints, not with digital-only delivery | Taxable with prints, not with digital-only delivery | Not covered here |
| Consulting | Not taxable | Services generally not taxable | Services generally exempt unless listed | Professional services pay B&O tax; some services became taxable in October 2025 |
Sources: Texas Comptroller publications 94-116, 96-259, 94-112, 94-111 and 94-127; CDTFA Publication 108, Publication 9, the photography guide and the gig economy guide; New York TB-ST-129, TB-ST-104, TB-ST-505, TSB-M-91(4)S, TSB-A-20(66)S and TB-ST-740; Washington DOR services subject to sales tax, the janitorial guide and the ESSB 5814 FAQ.
Which states tax almost every service?
Three states tax services by default:
- Hawaii has no sales tax. Its general excise tax "is assessed on all business activities," at 4% for most services, plus a 0.5% county surcharge in every county. The tax is on the business, but Hawaii lets you visibly pass it on to the customer.
- New Mexico's gross receipts tax covers receipts from performing services in New Mexico.
- South Dakota says its sales tax "applies to all services unless state law specifically exempts the service," and lists engineering, accounting and business consulting as taxable examples (Contractor's Excise Tax Guide, January 2026).
If you work in one of these states, assume your labor is taxable until the state says otherwise.
How are labor and materials taxed on the same invoice?
On repair and construction jobs, materials are usually taxed somewhere along the way. The question is whether you pay that tax when you buy them or collect it from the client. Two examples:
Texas, residential repair. The Comptroller says "labor to repair, remodel, or restore residential real property is not taxable" (Publication 94-116). Materials depend on how you write the contract:
| Contract type | Who pays tax on materials | What the invoice shows |
|---|---|---|
| Lump-sum (one price for the job) | You, when you buy them | One price, no sales tax line |
| Separated (labor and materials priced separately) | The client, on the materials charge | Labor untaxed, materials taxed, tax on its own line |
Commercial work in Texas is different. The Comptroller taxes "the total amount charged for remodeling, repairing, or restoring nonresidential real property," labor included.
California, construction contractors. CDTFA says "construction contractors are generally the consumers of materials" (Publication 9). On a lump-sum contract, you pay tax on what the materials cost you and don't add sales tax to the client's bill. Repair work on goods follows a separate rule: "tax generally does not apply to your itemized charges for repair labor," and you must keep invoices that show labor separately from parts.
The practical rule in both states: put labor and materials on separate lines. Itemizing is what lets you treat labor as untaxed in California, and in Texas it decides whether the client sees a tax line on materials at all.
Do plumbers and electricians charge sales tax on labor?
It depends on the state and on whether the work is a repair or an improvement.
- Texas: residential repair labor is not taxable. Commercial repair labor is.
- New York: repair and maintenance of real property is taxable, while capital improvements are not. New York's own examples: installing a hot water heater is a capital improvement, and replacing its thermostat is a taxable repair. As TB-ST-104 puts it, "because the work is a capital improvement, there is no sales tax due on the charge to the customer."
- Washington: installing, repairing and constructing for others are retail services, so sales tax applies.
- California: contractors are generally the consumers of the materials they install, and itemized repair labor is generally untaxed.
Permit fees are a separate question. The electrician invoice example passes them through at cost on an untaxed line. See the plumber and contractor pages for sample invoices with taxable and untaxed lines.
Do cleaning businesses charge sales tax?
In some states, yes, including on homes.
- Texas: "Tax is due on the charge to clean a home, office, warehouse, garage" and similar buildings (Publication 94-111). A self-employed person who provides traditional household services is the exception. A maid service is not.
- New York: sales tax applies to "all charges for interior cleaning and maintenance services performed in New York State" (TSB-M-91(4)S).
- Washington: janitorial income pays business and occupation (B&O) tax, and "retail sales tax does not apply."
Supplies you resell to the client, such as replacement filters, are goods and are usually taxable. The cleaning business invoice example taxes only those lines.
Is lawn care taxable?
In several states it is.
- Texas: "If you do landscaping or lawn or plant care, you should be collecting sales and use taxes" (Publication 94-112). That covers homes and businesses. Work bought by a homebuilder for a new home is an exception.
- New York: mowing lawns and other maintenance are taxable. Planting a new lawn is a capital improvement and is not (TB-ST-505).
- Washington: "landscaping and landscape maintenance" are retail services.
Mulch, plants and other materials are usually taxable even where the labor isn't. See the landscaper invoice example.
Do photographers charge sales tax?
Usually, when the client gets something physical.
- California: photos sent electronically "are not subject to tax when you do not provide your customer any tangible personal property." Add prints, and CDTFA's worked example taxes the entire charge, session fee included (photography guide).
- New York: the Department's stated position is that "sales of photographic images delivered solely electronically are not subject to sales tax," while photos delivered in a tangible form are (TSB-A-20(66)S).
- Texas: the Comptroller lists "photography and videography" as labor that results in the sale of a taxable item (Publication 96-259).
If you sell a session with a print package, check whether your state taxes the whole package or only the prints before you split the invoice. See the photographer invoice example.
Do consultants and designers charge sales tax?
In most states, pure advice is untaxed. Texas lists "consulting services" among its nontaxable services (Publication 94-127). New York says "sales of services are generally exempt from New York sales tax unless they are specifically taxable," though it does tax interior decorating and design services. California's guide says that "if you provide a service rather than sell tangible goods, sales and use tax generally does not apply."
There are exceptions. South Dakota taxes business consulting. Hawaii and New Mexico tax services generally. Washington added sales tax on several services from October 1, 2025, including information technology, custom website development, advertising and temporary staffing (ESSB 5814 FAQ). Design work that ends in a physical deliverable can also be taxable in states that tax artwork or drawings, so check before you invoice.
How do you show sales tax on an invoice?
Give each item its own line, mark which lines are taxable, and show the tax as a separate line with its rate. Here is a Texas residential faucet repair on a separated contract, where labor is untaxed and materials are taxed:
| Item | Qty | Rate | Taxable | Amount |
|---|---|---|---|---|
| Labor: replace kitchen faucet (hours) | 2 | $95.00 | No | $190.00 |
| Faucet and supply lines | 1 | $145.00 | Yes | $145.00 |
| Subtotal | $335.00 | |||
| Sales tax, 8% on $145.00 (example rate) | $11.60 | |||
| Total | $346.60 |
The 8% is only for illustration. Use the combined state and local rate for where the work happens. Under a lump-sum contract in Texas, the same job would show one price and no tax line, because you paid the tax when you bought the faucet.
Three habits keep tax on invoices clean:
- Describe the work precisely. "Replace faucet" and "install new water heater" can be taxed differently in New York, and the description is your record of which one it was.
- Keep pass-through fees on their own untaxed line. Permit and inspection fees billed at cost are easier to explain that way.
- Keep invoices that show the split. California requires records showing labor charges separately.
For the rest of what belongs on an invoice, see how to write an invoice. On jobs billed in stages, apply the same split on every progress invoice.
What about VAT and GST?
Outside the US, VAT and GST usually apply to services as well as goods. In the UK, "VAT (Value Added Tax) is a tax added to most products and services sold by VAT-registered businesses," and you must register once your taxable turnover goes over £90,000 in a 12-month period (GOV.UK). Once registered, you charge VAT on your labor too, and your invoices need extra details. The glossary entry on the tax invoice covers those.
How does SolidInvoice handle sales tax on invoices?
SolidInvoice lets you set up your tax rates once and apply them line by line, so labor and materials can sit on the same invoice with tax only on the lines that need it. The tax shows as its own line with its rate, and the client pays the total from the invoice's card or PayPal pay link. You can add a discount per line, download any invoice as a PDF, and export your data to CSV for your accountant.
SolidInvoice doesn't decide which of your services are taxable. You choose the rate and the taxable lines based on your state's rules. See pricing for what each plan includes.
Sales tax on services FAQ
Is labor taxable?
It depends on the state. Many states tax labor only when their law lists that service. Texas leaves residential repair labor untaxed but taxes commercial repair, lawn care and cleaning. New York taxes repair labor but not capital improvements. Hawaii, New Mexico and South Dakota tax nearly all services. Rules last checked October 2026.
Do I charge sales tax on services?
Only if your state taxes that service. Most states tax goods and a list of named services, so check your state revenue department's list for your trade. Consulting is untaxed in Texas and generally in California and New York, while South Dakota, Hawaii and New Mexico tax most services.
Should labor and materials be on separate lines on an invoice?
Yes. Many states tax materials and labor differently, so separate lines let you apply tax only where it is due. California ties untaxed repair labor to itemized charges, and a Texas separated contract taxes the materials line while the residential repair labor stays untaxed.
Do photographers charge sales tax on digital photos?
In California and New York, photos delivered only electronically are not subject to sales tax, while prints and other tangible copies are. In California, adding prints makes the whole charge taxable, session fee included. Texas lists photography as taxable labor.
Is lawn care taxable?
In some states. Texas taxes landscaping and lawn care for homes and businesses. New York taxes mowing and other maintenance, but not planting a new lawn. Washington treats landscaping and landscape maintenance as retail services. Materials such as mulch and plants are usually taxable.
Do I charge sales tax on labor when I install materials?
It depends on the contract and the state. In California, construction contractors are generally the consumers of the materials they install, so they pay tax when buying and don't add it to the bill. In Texas, a lump-sum residential contract works the same way, while a separated contract taxes the materials line.
Set your tax rates once and mark each line taxable or not. Start a free 14-day trial of SolidInvoice.